Medbox Inc (OTCMKTS:MDBX) Makes a Lengthy Recap, Stops Slide

Yesterday morning a letter to Medbox Inc (OTCMKTS:MDBX) shareholders was put up, signed by CEO Jeff Goh. The lengthy read provided a recap of recent company activity, in an upbeat tone that is perhaps a bit divorced from the company’s chart performance. At the very least the PR seemed to stop the price slide and MDBX stopped 11% up by the bell, at $0.12 per share.

The stock was plowing through ever newer 52-week lows only recently, dropping to a close as low as $0.052 per share. The situation was alleviated by a previous press release, highlighting a round of financing MDBX signed. Sadly, the terms of the financing were far from favorable for the public company.

The same financing is referenced in yesterday’s letter, as part of the “more than $8 million” raised in 2015 so far. While the press release describes this as a vote of confidence in the company’s future, the financing detailed in the Aug 26 8-K filing is virtually risk-free for the investor.

The terms of the deal include the conversion of debentures at a 49% discount from MDBX‘s VWAP 30 days prior to conversion. No matter how low the price might to, the investor will always be getting their locked discount from the new lows, so it’s hard to imagine how this is a display of confidence in MDBX‘s future.

Technical aficionados on discussion boards have been predicting bottoms for MDBX stock for a while now and the price burst through them on its way down with relative ease. Whether the stock can cling to the remaining gains of last week’s run remains to be seen.